CLEARWATER, Fla., Nov. 12, 2008 (GLOBE NEWSWIRE) -- Avantair, Inc. (OTCBB:AAIR) (OTCBB:AAIRU) (OTCBB:AAIRW) ("the Company"), the only publicly traded stand-alone fractional operator and the sole North American provider of fractional shares in the Piaggio Avanti P.180 aircraft, today reported financial and operational results for the first quarter ended September 30, 2008.
First Quarter Fiscal 2009 Business Highlights
-- Strong sales growth resulted in a 27.4% year-over-year increase
in total revenues, to $32.7 million, due to the success of recent
marketing initiatives and despite ongoing challenging
macro-economic conditions
- Revenues from maintenance and management fees were $17.1
million, an increase of 31.6% versus the same year-ago
period
- Charter card and demonstration revenues increased 12.5% over
the prior year's levels
-- Loss from operations decreased 57.7% year-over-year, to $1.9
million
-- EBITDA loss for the quarter declined to $819,980 from $1.3
million for the fourth quarter of fiscal year 2008
-- Avantair was EBITDA positive for the month of September
"Our strong performance this quarter demonstrates continued penetration of the market for private jet travel and an ongoing focus on operational execution that culminated in the achievement of EBITDA profitability for September," stated Mr. Steven Santo, CEO of Avantair. "Recent marketing and advertising campaigns, coupled with a weakening economy, are highlighting Avantair's position as the lowest-cost and most fuel-efficient provider. This in turn generated significant interest, in the form of leads generated and fractional share sales, from customers of competing fractional share programs. Coupled with recent utilization improvements and lower fuel costs starting in September, Avantair is well positioned to further benefit from these trends."
First Quarter 2009 Financial Results
Total revenues for the first quarter ended September 30, 2008 were $32.7 million compared to $25.7 million for same period last year, an increase of 27.4%.
Revenues from fractional aircraft shares sold were $12.5 million for the first quarter of fiscal 2009, an increase of $2.7 million or 27.4% compared with $9.8 million for the first quarter of fiscal 2008. This was primarily due to a 23% increase in the number of fractional shares sold to 678.5 through September 30, 2008, from 552 fractional shares sold through September 30, 2007. According to accounting principles generally accepted in the United States ("GAAP"), fractional aircraft sales revenues and the associated costs of fractional aircraft sales are amortized over 60 months.
Revenues from maintenance and management fees were $17.1 million, an increase of 31.6% from $13.0 million in the year-ago period. This reflects a 23% increase in the number of fractional aircraft shares sold and the increase in monthly management fees for new and renewing fractional shareowners to $9,650 during the first quarter of fiscal 2009, from $9,400 in the prior year quarter.
Charter card and demonstration revenue for the three months ended September 30, 2008 was $2.4 million, up 12.5% from $2.1 million for the three months ended September 30, 2007. This reflects an increase in hours flown by customers using the Company's card program, as a result of increased marketing of charter cards. Charter card revenue is recognized when the cardholder uses the hours, not when the card hours are purchased.
As a result of increased fleet size and a 23% year-over-year increase in the number of fractional shares sold, the expected increase in cost of flight operations, including the cost of fuel, was limited to 3.4% this quarter. The total cost of flight operations was $16.3 million for the first quarter ended September 30, 2008, compared to $15.8 million in the same year-ago period, which clearly demonstrates the leveragability of our business model. This was further highlighted by a significant decrease in charter expenses, due to use of the Company's core aircraft to alleviate scheduling conflicts, enhanced flight software and flight scheduling staff training.
SG&A expenses for the first quarter of fiscal 2009 were $6.6 million, or 20.1% of revenue, compared to $5.6 million, or 21.7% of revenue, in the fourth quarter of fiscal 2008. We were encouraged by the decline in these expenses as a percent of revenue, as this clearly reflects the leverage in our model as we increase our fleet.
Loss from operations for the first quarter of fiscal 2009 was $1.9 million versus $4.5 million in the same year-ago period.
Net loss for the first quarter of fiscal 2009 decreased by 30.4% to $3.3 million from $4.8 million during the same period last year.
Subsequent Development
For the month of October, Avantair announced record sales in what is seasonally a soft month. This performance highlights growing consumer demand for the Piaggio Avanti P. 180 and success of the Company's recent marketing and advertising campaigns aimed at increasing leads generated from owners of competing fractional share programs.
Mr. Santo concluded, "We expect demand for our fractional program to remain robust given its advantageous economics relative to competing programs and an expanding sales pipeline. Business momentum continued into October as sales reached a monthly record. As such, we anticipate strong year-over-year revenue growth for the second fiscal quarter."
Conference Call
Avantair will host a conference call to discuss financial results for its first quarter of fiscal 2009 and provide an update on business developments at 5:00 p.m. Eastern Time today. Investors may participate in the conference call by dialing 800-218-0713 (303-262-2161 for international callers). When prompted, ask for the "Avantair Inc. Fiscal First Quarter 2009 Earnings Conference Call." A telephonic replay of the conference call may be accessed approximately two hours after the call through November 19, 2008, by dialing 800-405-2236 (303-590-3000 for international callers). The replay access code is 11122339#. The conference call will be webcast simultaneously on the Avantair Inc. website at www.avantair.com under Investors. The webcast replay will be archived for 12 months.
About Avantair
Avantair, the only publicly traded stand-alone fractional operator and the sole North American provider of fractional shares in the Piaggio Avanti P.180 aircraft, is headquartered in Clearwater, FL with approximately 400 employees. The Company offers private travel solutions for individuals and businesses traveling within its service area, which includes the continental United States, Canada, the Caribbean and Mexico, at a fraction of the cost of whole aircraft ownership. The Company currently manages a fleet of 50 aircraft, with another 59 Piaggio Avanti IIs on order through 2013. For more information about Avantair, please visit: http://www.avantair.com.
Forward Looking Statements
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act, with respect to Avantair's future financial or business performance, strategies and expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" and similar expressions. Avantair cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and Avantair assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance.
In addition to factors previously disclosed in Avantair's filings with the Securities and Exchange Commission (SEC) and those as may be identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: general economic and business conditions in the U.S. and abroad, changing interpretations of generally accepted accounting principles, changes in market acceptance of the company's products, inquiries and investigations and related litigation, fluctuations in customer demand, management of rapid growth, intensity of competition. The information set forth herein should be read in light of such risks. Avantair does not assume any obligation to update the information contained in this press release.
Avantair's filings with the SEC, accessible on the SEC's website at http://www.sec.gov, discuss these factors in more detail and identify additional factors that can affect forward-looking statements.
AVANTAIR, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
ASSETS
September 30, June 30,
2008 2008
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents $ 8,217,851 $ 19,149,777
Accounts receivable, net
of allowance for doubtful
accounts of $213,487 at
September 30, 2008 and
June 30, 2008 10,599,869 5,692,809
Inventory 198,060 252,407
Current portion of
aircraft costs related
to fractional share
sales 40,377,987 40,417,203
Current portion of notes
receivable 1,498,103 832,107
Prepaid expenses and
other current assets 2,026,430 2,173,992
------------- -------------
Total current assets 62,918,300 68,518,295
------------- -------------
AIRCRAFT COSTS RELATED TO
FRACTIONAL SHARE SALES -
net of current portion 81,904,559 92,383,071
------------- -------------
PROPERTY AND EQUIPMENT, at
cost, net of accumulated
depreciation and
amortization of
$10,329,062 at September
30, 2008 and $8,989,277
at June 30, 2008 24,856,859 25,663,264
------------- -------------
OTHER ASSETS
Cash - restricted 2,834,890 2,826,290
Deposits on aircraft 9,607,773 8,679,277
Deferred maintenance
agreement on aircraft
engines 2,027,203 2,228,509
Notes receivable-net of
current portion 258,207 1,008,223
Goodwill 1,141,159 1,141,159
Other assets 1,980,461 2,029,367
------------- -------------
Total other assets 17,849,693 17,912,825
------------- -------------
Total assets $ 187,529,411 $ 204,477,455
============= =============
AVANTAIR, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30, June 30,
2008 2008
------------ ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 5,274,440 $ 4,718,355
Accrued liabilities 3,566,068 5,528,472
Customer deposits 506,481 1,905,682
Short-term notes payable 10,810,705 15,775,260
Current portion of
long-term notes payable 7,165,558 6,648,093
Current portion of
deferred revenue related
to fractional aircraft
share sales 48,789,487 47,778,900
Unearned management fee
and charter card revenues 15,956,963 16,316,044
------------ ------------
Total current liabilities 92,069,702 98,670,806
------------ ------------
Long-term notes payable,
net of current portion 21,734,489 23,856,322
Deferred revenue related
to fractional aircraft
share sales, net of
current portion 91,948,781 96,525,785
Other liabilities 2,682,462 2,636,730
------------ ------------
Total long-term liabilities 116,365,732 123,018,837
------------ ------------
Total liabilities 208,435,434 221,689,643
------------ ------------
COMMITMENTS AND CONTINGENCIES
Series A convertible
preferred stock $.0001
par value, authorized
300,000 shares; 152,000
shares outstanding 14,461,743 14,439,358
------------ ------------
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001
par value, authorized
700,000 shares; none
issued -- --
Common stock, Class A,
$.0001 par value,
75,000,000 shares
authorized, 15,297,621
shares issued and
outstanding at September
30, 2008 and 15,286,792
shares issued and
outstanding at June 30,
2008 1,530 1,529
Additional paid-in capital 44,933,905 45,314,393
Accumulated deficit (80,303,201) (76,967,468)
------------ ------------
Total stockholders' deficit (35,367,766) (31,651,546)
------------ ------------
Total liabilities and
stockholders' deficit $187,529,411 $204,477,455
============ ============
AVANTAIR, INC. AND SUBSIDIARIES
Condensed Consolidated Statement of Operations
(Unaudited)
2008 2007
------------ ------------
Revenues
Fractional aircraft sold $ 12,493,716 $ 9,803,793
Maintenance and management
fees 17,077,139 12,974,596
Charter card and
demonstration revenue 2,366,224 2,103,382
FBO and other revenues 739,382 772,728
------------ ------------
Total revenue 32,676,461 25,654,499
------------ ------------
Operating expenses
Cost of fractional aircraft
shares sold 10,605,023 8,047,427
Cost of flight operations 11,810,384 12,097,515
Cost of fuel 4,512,406 3,691,420
General and administrative
expenses 5,660,787 4,533,056
Selling expenses 907,751 1,023,856
Depreciation and amortization 1,082,265 761,439
------------ ------------
Total operating expenses 34,578,616 30,154,713
------------ ------------
Loss from operations (1,902,155) (4,500,214)
------------ ------------
Other income (expenses)
Other income 1,200 --
Interest income 24,703 192,722
Interest expense (1,459,481) (485,206)
------------ ------------
Total other expenses (1,433,578) (292,484)
Net loss (3,335,733) (4,792,698)
Preferred stock dividend
and accretion of expenses (391,513) --
------------ ------------
Net loss attributable to
common stockholders $ (3,727,246) $ (4,792,698)
============ ============
Loss per common share:
Basic and diluted $ (0.24) $ (0.31)
============ ============
Weighted- average common
shares outstanding:
Basic and diluted 15,287,694 15,220,817
============ ============
Avantair, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
For the Nine Months Ended September 30, 2008
January February March April
------- -------- ----- -----
Revenue $10,105,546 $ 9,593,965 $10,245,899 $10,264,227
Cost of
fractional
aircraft
shares sold 3,143,834 3,006,472 3,254,022 3,298,867
Operating
expenses 8,699,621 8,090,882 7,777,756 7,739,837
Depreciation
and
amortization 385,342 383,849 363,675 249,156
--------------------------------------------------
12,228,797 11,481,203 11,395,453 11,287,860
--------------------------------------------------
Loss from
operations $(2,123,251) $(1,887,238) $(1,149,554) $(1,023,633)
==================================================
EBITDA $(1,737,909) $(1,503,389) $ (785,879) $ (774,477)
==================================================
May June July August September
--- ---- ---- ------ ---------
Revenue $10,451,238 $10,673,343 $10,783,890 $10,940,121 $10,952,450
Cost of
fractional
aircraft
shares
sold 3,459,206 3,506,448 3,565,159 3,573,391 3,466,473
Operating
expenses 7,366,817 7,387,041 7,700,631 7,810,124 7,380,573
Deprecia-
tion
and
amorti-
zation 249,156 247,419 360,755 360,755 360,755
-----------------------------------------------------------
11,075,179 11,140,907 11,626,545 11,744,270 11,207,801
-----------------------------------------------------------
Loss
from
opera-
tions $ (623,941) $ (467,564) $ (842,655) $ (804,149) $ (255,351)
==========================================================
EBITDA $ (374,785) $ (162,957) $ (481,900) $ (443,394) $ 105,404
==========================================================